Energy Storage refers to the process of capturing and storing energy for later use. It helps balance supply and demand by storing excess energy during low-demand periods and releasing it during high-demand periods. Common types of energy storage include batteries (e.g., lithium-ion, lead-acid), pumped hydro, compressed air, and thermal storage. Energy storage systems are essential for integrating renewable energy sources like solar and wind, providing backup power, enhancing grid stability, and supporting energy efficiency.

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Demand Charge and Response with Energy Storage

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Commercial and industry (C& I) customers incur two types of electricity charges on their bills: one for the amount of energy usage and another one for the maximum demand during certain billing periods. The second charge type is known as Demand Charge (DC), which could account for over half of a customers’ electricity bill. Those C& I customers often sign up for Demand Response (DR) programs to contribute to peak demand reduction as well as to receive incentives and rewards from participating in the programs. The critical factor of achieving both DR and DC reduction is to recognize the nature of these two types of problems and create an effective strategy that can handle them at the same time by which the benefits from DR incentives and DC reduction are maximized. This paper discusses the possible DR scenarios with DC reduction framework for C& I customers who use a Behind-the-Meter (BTM) energy storage and proposes a consistent real-time procedure of deciding battery’s charging and discharging set points to solve the problem of maximizing the rewards by conducting DRs as well as the savings by reducing DC costs.

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